2024 Tax Adjustments Create Opportunities for Smart Gift Planning

The Internal Revenue Service has announced the 2024 inflation adjustments for the lifetime gift and estate tax basic exclusion and the gift tax annual exclusion. The 2024 inflation adjusted amounts reflect a 5.4% increase and will be effective January 1, 2024. 

The lifetime gift and estate tax basic exclusion is the amount individuals can shield from gift and estate tax during their lifetime and at death. This exclusion, which is currently $12,920,000, will increase by $690,000 in 2024 to $13,610,000. It may be reasonable to anticipate another increase of $500,000 in 2025 depending on various economic factors.

The annual gift exclusion amount is the total that an individual can give to any person without impacting the lifetime exclusion amount. This exclusion, which is $17,000 for 2023, will increase by $1,000 to $18,000 in 2024. By 2025, this figure could reach $19,000.

These inflation-driven increases create avenues for strategic gift and estate planning.

The current gift and estate tax exclusion amounts were part of the 2017 Tax Cuts and Jobs Act (TCJA) enacted in 2017. The higher limits are scheduled to revert to their pre-2018 level ($5 million, indexed for inflation) when the provisions of the TCJA sunset on December 31, 2025.

With this in mind, and given the political uncertainty of an upcoming election year, it may be time to consider your existing gift and estate plans in light of the changing tax landscape.

To find out how these changes may impact your individual circumstances, contact us. Our experienced professionals in the Weaver Family Office Services are here to provide tailored guidance from our team.

©2023